Unite Regulatory News (UTG)

22 Dec 2009 07:00



22 December 2009 

THE UNITE GROUP PLC

("UNITE", the "Group", or the "Company")

UNITE ANNOUNCES SUCCESSFUL CONCLUSION OF USAF CAPITAL RAISE AND SUBSEQUENT £95 MILLION SALE OF ASSETS

The UNITE Group plc, the UK's leading developer and manager of student accommodation, today announces the successful completion of its £167 million capital raise, inclusive of UNITE's co-investment, for The UNITE UK Student Accommodation Fund (the "Fund"/"USAF").

Following this, and as previously announced, a proportion of the proceeds has been used to acquire a portfolio of five assets from UNITE (the "Transaction") for a purchase consideration of £95.4 million. The portfolio comprises 905 bed spaces across five properties in London, Edinburgh, Exeter and Glasgow further enhancing the Fund's portfolio of high quality, direct let student accommodation. Following the completion of the Transaction, USAF now holds 58 properties in 18 cities, representing 19,468 bed spaces.

Taking into account the target leverage of the Fund, USAF now has the capacity to invest up to a further £225 million in either acquisitions from UNITE or other income-generating student accommodation assets from third parties, as well as funding a programme of modest refurbishments of certain properties within the Fund's existing portfolio.

The consideration for the Transaction, based on an independent valuation performed by CBRE, represents a net initial yield of 6.35% and is 18% higher than the carrying value of the assets in the Group's 30 June 2009 half year financial statements, prepared under International Financial Reporting Standards ("IFRS"). Under IFRS, some of the assets sold to the Fund were carried at cost rather than at open market value. When compared to open market value, which is used in arriving at the Company's adjusted net asset value, the consideration reflects an increase in value of 6% since 30 June 2009.

UNITE will receive £95.4 million of gross proceeds which will be used to pay down debt of £66 million and to fund UNITE's investment of £18.6 million into new units in USAF, reflecting net proceeds of £10.4 million to UNITE. £6.5 million of these proceeds will be used to pay down interest rate swaps, reducing UNITE's average cost of debt to 5.6%.

Following the Fund's capital raise, UNITE's co-investment stake in USAF stands at 16.3%.

Commenting, Mark Allan, Chief Executive of UNITE, said:

"The completion of this oversubscribed fundraising into USAF concludes a very encouraging year for UNITE. Against the backdrop of ongoing market difficulties, the Company has maintained its position at the forefront of its sector and significantly strengthened its financial position through a number of initiatives including the creation of the OCB joint venture, the delivery of high occupancy levels and a strongly supported share placing in September 2009.

"The disposals to USAF will enable the Company to continue its focus on growth through site acquisitions and the progression of future developments, whilst also maintaining an economic interest in the income generating properties held within USAF through our co-investment stake in the Fund."

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About The UNITE Group

The UNITE Group is the UK's leading developer and manager of student accommodation, with a business model that focuses on three core areas; 

Development: UNITE undertakes the acquisition, planning and development of purpose-built student accommodation in the UK.

Professional property management: UNITE will be home to some 38,500 students during the 2009/10 academic year and has consistently proven high occupancy levels across its portfolio.

Co-investing asset management: Working on behalf of its partners, UNITE acts as Fund Manager for the UNITE UK Student Accommodation Fund in addition to being 16.3% shareholders. UNITE also manages a number of Joint Venture partnerships.

UNITE works closely with the universities and colleges, in order to deliver high quality, well-located student accommodation at affordable prices in strong higher education markets.

Founded in 1991, UNITE Group is listed on the London Stock Exchange (UTG).

The UNITE UK Student Accommodation Fund

UNITE Group established the UNITE UK Student Accommodation Fund at the end of 2006. The Fund helped transform UNITE's business model to that of a developer of new purpose-built student accommodation and manager of funds which own student accommodation properties operated by UNITE and in which the Company has a significant minority stake.

The aggregate size of the Fund's portfolio following the acquisition in December 2009 is circa £1 billion with 19,468 bed spaces in 58 properties across 18 UK markets. Following the equity raise the number of unitholders in the Fund is now over 100.

www.unite-group.co.uk

www.unite-students.com